Government aid must end - Stelios
The airline industry does not follow the rules of Darwin because its dinosaurs do not die, Sir Stelios Haji-Ioannou said today (September 29).
Aviation was an industry which attracted more entrepreneurs and money than it deserved, he told the World Low Cost Airlines Congress in Barcelona.
That, he said, was part of the industry's problems.
Sir Stelios, founder of low cost carrier easyJet and now a board member of the airline, said BA and American Airlines, despite losing money, were still able to raise cash.
"Why are they allowed to? This process has to end sometime and they should go out of business," he said.
Citing state aid to carriers like Alitalia and Olympic Airlines, Sir Stelios said that governments were the "biggest culprits".
He added: "This industry has an amazing way of finding new capital and entrepreneurs. Despite its monumental problems only two airlines have been grounded in Europe."
He said, referring to alleged rows on the easyJet board last year over growth rates, he said this was something that directors needed to debate.
He said that the yields on rival Ryanair were going down so "it remains to be seen which growth route will produce the better result".
Airlines which wanted to carry the most passengers were taking a risk. "It is possible to go for higher numbers when the economy recovers but pursuing passengers rather than profit is not a good policy.
"I wish (Michael) O'Leary (ceo of Ryanair) a lot of luck. He is a brave man," Sir Stelios said.
But he dismissed the idea that market share was important. "You need to make sure that you have a decent schedule, decent aircraft and can fly passengers from where they are to where they want to go," he said.
Sir Stelios told delegates that he believed the difference in airline models was being eroded which was good for easyJet.
But he said the fact that legacy carriers like BA were now charging less for short haul was bad for his carrier.
Azran Osman Rani, ceo of Air AsiaX which runs a low cost service between London and Kuala Lumpur, said it was not the model which counted but how it was executed.
"People in the industry keep narrowly focused on the model. It is not engraved in stone. People have tended to adopt the South West Airlines/easyJet model and failed.
"It is not the model but the way it is executed.
"It is not important that it is a particular model. It is more important in how it is run. If you take the same model and see that there is a big difference in their costs, it is because of the way it is executed," he said.
"If you have a brand that works, that is what matters."
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